California Insurance License Exam Practice Test Practice Question
Which of the following is a hazard?
Correct Answer: D
Rationale: Option D accurately defines a hazard as a condition that increases the likelihood of a loss occurring. Hazards can include factors like unsafe environments or risky behaviors that elevate risk levels.
Option A, a peril, refers to the actual cause of a loss, such as fire or theft, rather than a condition that increases risk.
Option B, a speculative risk, involves situations where there is a chance of gain or loss, which is different from a hazard that solely increases the chance of loss without potential for gain.
Option C describes exposure units, which relate to the number of similar items at risk, but does not directly define a hazard itself.
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